Philly Gets $2M for Shorted Concrete

A construction company will pay over $2 million to settle allegations that it skimped on the amount of concrete and asphalt used in paving projects around Philadelphia, then overbilled for the work.

Without admitting guilt, Danella Companies Inc., doing business at the time as Danella Construction Corp., agreed to pay a combined amount of $2,361,000 to Philadephia Gas Works and the City of Philadelphia as part of a no-fault agreement, the Office of the Inspector General announced Tuesday (Jan. 7).

Plymouth Meeting, PA-based Danella was contracted by PGW to reconstruct and pave city streets, sometimes covering an entire block, as part of PGW's infrastructure-modernization efforts to replace aging underground cast iron pipes with more modern, polyethylene pipes.

Danella Companies Inc.

After evaluating 400 samples from various paving projects, Philadelphia Gas Works alleged that its contractor, Danella Companies, shorted the utility on concrete and asphalt installed then overbilled by at least $1.75 million.

PGW is the largest municipally owned gas utility in the country, according to its website. The utilities company manages and maintains over 6,000 miles of gas mains and service pipes.

Danella has been installing and maintaining oil and natural gas pipeline facilities for over 40 years, according to the company's website. The company also provides a range of construction and maintenance services for electric, water and telecommunications utilities.

Material Discrepancies

The contracts were valued at more than $22 million, a portion of which was for paving. The contracts called for 8-10 inches of concrete and 3.5 inches of asphalt to be installed. However, an investigation by the OIG, which was requested by PGW, found "significant discrepancies" in the amount of construction paving material billed to PGW by Danella and the amount of material Danella, or one of its subcontractors, actually installed.

As part of the no-fault settlement, Danella denied any wrong doing and cooperated with the investigation, as well as agreeing to pay $1,836,000 to PGW for the amount overcharged plus the cost of the core samples, and $525,000 to the city as a penalty.

Philadelphia Gas Works

Danella denied any wrong doing, but agreed to pay the utility back for the overbilled work. PGW called the no-fault settlement a "win" for its ratepayers.

"This agreement sends a clear message to contractors that the City of Philadelphia will not tolerate being overcharged," said Mayor Michael A. Nutter. "I want to commend Inspector General Amy Kurland and the Inspector General's Office for their diligence and hard work."

Danella did not immediately return a request for comment Friday (Jan. 11).

'Every Dollar Matters'

For the investigation, PGW took about 400 core samples from paving work done at several different projects since 2010. The samples were analyzed by the OIG, PGW engineers and an independent engineering firm. In many instances, roadbeds contained less than the required amounts of concrete and asphalt, according to the OIG.

Danella's invoices were also reviewed, showing the company "significantly overbilled" PGW by approximately $1.75 million for construction materials that weren't actually installed, according to the OIG.

"We were happy to work closely with PGW to ensure that contractors meet their obligations," said Kurland. "At a time when every dollar matters, it's important that companies that have the privilege of doing business with the City and City-related agencies bill only for the work they have properly completed."

'Win' for Ratepayers

The company also agreed to guarantee the work for three years to protect against any problems resulting from the shortages and enhance its corporate compliance program to protect against future shortages.

According to the settlement, Danella will also provide at least one hour of general training to project managers and staff responsible for preparing bids, initiating projects, or performing work related to contracts with PGW, the city or city-related agencies when "paving of any kind is required as part of the contract."

"This settlement is a win for PGW ratepayers," said PGW President and CEO Craig E. White. "It means that we can dedicate every dollar possible to upgrading our infrastructure while keeping rates low for our customers."